Maine's state employees focus of state budget woes

STATE — Maine's financial picture is getting worse for state employees, and better for corporations, according to a recently-released report from the National Governors Association.

The information was released as part of a fiscal survey that tracks spending and revenues in all 50 states by fiscal year (FY).

In FY08, FY09, and FY10, state budgets across the nation shrank by a combined 12 percent. In FY11, budgets increased by about 2.4 percent, marking a turnaround in the national recession.

"While the overall fiscal situation of states has improved from the depths of recent recession, the [survey] underscores the constrained financial situation facing states for this current fiscal year 2012," read the report. "Despite recent relative gains, aggregate state revenues and spending figures remain below their pre-recession levels."

The survey gives insight into how different states have approached the budget crunch created by the national recession. In Maine, state staffing cuts have been a big part of the picture.

State workers

In Maine, state employees have come under the hammer.

Between 2010 and 2012, Maine shed nearly 500 state jobs, a reduction of about 3.4 percent.

"The administration's policy is to continue its effort to reduce the size of the state's work force," reads the report.

Maine was one of only eight states in the nation to use salary reductions (via furlough days and longevity and merit pay freezes) as a strategy to reduce budget gaps for FY11. In FY12, it was one of nine states that used salary reductions, and one of 16 states that used layoffs for the same purpose.

Other cuts that impacted state employees included a hiring freeze, early retirement programs, and cuts to state employee benefits.

Chris Quint, executive director, Maine State Employees Association, said that state employees have been hit hard over the past few years.

"All of those policies that were put in place by LePage and by Baldacci did impact state employees. They lost money," he said. Furlough days under Baldacci have not been continued by LePage, but Quint said that losses in longevity and merit pay have been harmful for employees.

"When you're hired under certain assumptions, and then those assumptions don't happen, those are hits," he said.

But the group that Quint said is hardest hit may well be state retirees.

Under the LePage administration, a cap was imposed on annual cost of living adjustments for retirees, and there have been increases in the amount those same retirees have to spend on health insurance costs.

"More of them are going to have to rely on social services," predicted Quint.

However, said Quint, the report from the NGA doesn't mention that most of the loss in the state workforce isn't because existing workers were being fired or laid off.

Generally speaking, the state didn't hire for vacant positions. That can create problems too, said Quint.

"When you eliminated the vacant position, the work was not eliminated," he said. "People are doing two or three jobs now. They're overworked, they're overburdened, and the level of service is dwindling."

For FY13, layoffs, early retirements, a hiring freeze, benefit cuts, and salary reductions are once more being used as budget-balancing strategies, according to the report.

 Corporate taxes

The report cited tax relief as another goal in Maine, but personal taxes have continued to grow.

"The administration's plan is to continue its efforts to achieve further tax reductions and reduce spending," according to the report.

Tax income reductions have been achieved in corporate taxes, but not in sales or personal income taxes.

Between FY11 and FY12, sales taxes increased by 3.8 percent, from $976 million to just over $1 billion.  Personal income taxes increased by 2.2 percent, from $1.415 billion to $1.446 billion.

During the same time period, corporate income tax dropped from $209 million to $180 million, a decline of 13.9 percent.

Quint said that he feels that, with the state struggling to create a budget, $160 million in tax cuts were unwise, and helped to create a climate in which state workers suffered.

"There was not any way to pay for these tax cuts. Those tax cuts disproportionately benefited the upper tax brackets," he said. "They are not going to help the average working Mainer in any way, shape or form."

Requests to Governor LePage's office for comment have gone unanswered.